RComm board nod for 26 p.c. stake sale

MUMBAI, INDIA: Reliance Communications, led by billionaire industrialist Anil Ambani, on Sunday approved a 26 per cent strategic stake sale in the company after much speculation over UAE-based Etisalat's interest in the offer.

"The board of directors of Reliance Communications has approved in-principle the induction of strategic or private equity investors into the company for an up to 26 percent equity stake at an appropriate premium," the company statement said.

The board of the company, which has a subscriber base of 109 million and offers mobile services on both GSM and CDMA platforms, also gave its nod for pursuing other strategic or consolidation options.

The company, however, neither disclosed the name of the strategic buyer, nor fixed any time frame for realising the proposal.

The speculation of stake sale started after Etisalat, which has been bullish on India and wants to be a major player in the country, withdrew from the third generation (3G) telecom airwaves auction after the bids surpassed the $2 billion-mark.

Such reports of stake sale had seen the shares of Reliance Communications soar 14.03 percent on the Bombay Stock Exchange (BSE) during the week ended Friday at Rs.168.15.

An Abu Dhabi-based English daily The National had reported last week that Etisalat chairman Mohammed Omran had plans to acquire companies in India, which is the second-largest and the fastest-growing mobile market in the world.

In September 2008, Etisalat, which has over 100 million customers across 19 countries globally, had bought 45-percent stake in Swan Telecom for a cash consideration of close to $900 million.

The company's Indian operations, now called Etislat DB, has also unveiled its tariff for telecom services in the country under the "Cheers Mobile" brand name.

In July last year, Etisalat had entered into a 10-year long-term infrastructure sharing pact with Reliance Communications. The deal was worth an estimated $2.2 billion.

Reliance Communications, which has been in talks for an overseas partner or strategic sale for nearly two years now was earlier noncommittal about such specific moves but also did not rule out such a possibility.

"The company has been receiving various proposals from time to time from reputed international telecom companies expressing interest in acquiring a strategic equity stake in Reliance Communications," the company said last week.

"The company evaluates such proposals in line with the company's policy to constantly endeavour to enhance overall shareholder value," it said, adding it would disclose any developments at an appropriate time.